While the election in November is placing Democrats in a precarious position of posturing to be both fiscally conservative about the growing US debt and encouraging job growth to reduce unemployment the Obama administration has come up a with a pre-election proposal to spur the weak economy.
The $100 billion proposal Mr. Obama is outlining on Wednesday in Cleveland seems to be an initiative similar to what republicans would typically propose and perhaps likely propose after the election.
His proposals include:
- Expanding credit options for business from 14 to 17 percent
- Making the research credit permanent
It is likely that some corporations seem open to compromise in that some had recently told Senate leaders they would accept an end to some of the tax breaks protecting overseas profits in return for other incentives, notably the research credit.
"The R&D tax credit creates high-wage American jobs," the United States Chamber of Commerce says on its Web site, because at least 70 percent of the tax benefits are attributable to salaries for those doing the research, and only research done in the United States is eligible.
So while it may seem that R&D would spur some economic activity and hiring of tech positions it certainly has not dealt with the glut of low wage jobs disappearing overseas and housing industry cratering destroying trillions of wealth for the middle class.
However interestingly the US currently has record low federal marginal tax rates (until expiration), in addition $237 billion in tax cuts for individuals and $51 billion in tax cuts were issued with the stimulus package. So while it may seem tax cuts are sometimes thought as the only solution there has been a lot of that lately and we are close to a double dip, perhaps we need to do something else?
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com